Tax Audit

A tax audit (tax examination) is ZATCA's review of a taxpayer's returns, books, invoices and records to verify what was declared; it may end by confirming the return or by issuing an amended assessment with additional tax and penalties. It can be a desk review based on requested documents and data, or a field examination at the taxpayer's premises. For VAT, ZATCA gives 20 days' notice before a field examination, but may examine without notice where it has good reason to suspect a violation or refusal to cooperate, and the taxpayer must make all invoices, books and records available. ZATCA may not issue or amend an assessment after five years from the end of the calendar year in which the tax period falls, except in cases of evasion or failure to register when required, where the period is extended. For income tax the assessment period is five years from the filing deadline, and ten years if no return was filed or the return was incomplete or incorrect with intent to evade. For zakat it is five years, ten years for late, incomplete or unpaid returns, and unlimited where false documents are proven. In real estate, audits typically focus on classifying rent as exempt residential or taxable commercial, input VAT recovery ratios in mixed-use buildings, declared sale values compared with market value, and the zakat classification of properties as used or investment assets (deductible) versus properties held for sale (included in the zakat base). A taxpayer may object to ZATCA's decision before ZATCA within 60 days of notification; if the objection is rejected or not decided within 90 days, the taxpayer has 30 days to request settlement or to file a case before the Zakat, Tax and Customs committees.